Bars and restaurants caught between inflation, supply crunch and labor shortage as rebound “takes its course”

Restaurateurs and workers across the United States are struggling to bounce back from the pandemic and are hit by understaffing, skyrocketing prices and supply shortages.

Paula Tejeda is one of them.

Even after mass vaccinations, customer traffic is “still very volatile,” Tejeda, owner and founder of Chile Lindo, a deli and coffee shop in San Francisco, said in an interview with Yahoo Finance.

“The hotel industry, which is restaurants, small cafes and bars, is not back. We don’t have enough foot traffic, ”added the business owner.

The global outbreak has caused a huge shock in the restaurant industry – which now employs a million fewer workers than in 2019 and has yet to regain pre-pandemic levels.

Meanwhile, COVID-19 infections threaten a new wave ahead of winter: On Friday, news that Austria would reimpose a large lockdown rocked investors and stoked concerns about how the United States could be affected if cases increase.

For the entertainment industry, the recovery has been anything but mild. Restaurant and bar sales were flat in October compared to the previous month, according to the latest Commerce Department retail sales data.

This signals the pressure the hospitality industry is under pressure from rising inflation, stringent vaccination requirements, labor shortages and supply chain constraints – and of the Delta variant push that threatened the economy over the summer.

“We would have expected it to pick up, but it hasn’t, I guess it’s a sign that the recovery and the restaurant business have kind of run their course,” said Michael Pearce. , Senior US Economist at Capital Economics, to Yahoo Finance in an interview.

“The problem is that we know that restaurant prices are going up, so we would at least have expected an increase in the face value of spending in restaurants and bars, the indication is that the trend is no longer in the increase, “added the economist.

“The backlash is serious”

SAN FRANCISCO, CALIFORNIA – AUG 11: A pedestrian walks past a closed restaurant on August 11, 2020 in San Francisco, California. More than 2,000 businesses in the San Francisco Bay Area have closed permanently and many other small businesses are struggling to stay open as the Coranavirus (COVID-19) pandemic continues across much of the world. (Photo by Justin Sullivan / Getty Images)

The COVID-19 pandemic ushered in massive change in the restaurant industry, many were forced to shut down, while others had to make the decision to downsize and rely more on technology.

But now restaurants have completely reopened and customers are back, and restaurants are looking to hire again. However, the environment is characterized by a shortage of workers: the so-called “big resignation” has left millions of jobs unfilled.

Although the industry is recovering, many restaurant workers have left the industry for good.

Meanwhile, small businesses like Tejeda’s are lagging behind large corporations in the race to raise wages, making it even more difficult for them to attract a shrinking pool of available workers now that unemployment is on the rise. fell to 4.6% in October. New regulations designed to address concerns about COVID have presented an additional burden, some say.

We cannot face more bureaucracy. That’s enough. We already have enough [before] COVID … so we have a bunch of regulations because of COVID.Paula Tejeda, owner of the café

In San Francisco this summer, minimum wage for all city and county workers increased to $ 16.32 per hour – $ 0.25 more than it was previously at $ 16.07. But some small businesses say they can’t keep up given tight profit margins and skyrocketing prices.

“Hourly wages are very high,” Tejeda explained. “Without the foot traffic we depend on, we’re talking about selling a $ 2 coffee and an $ 8 empanada in three hours when you’re paying $ 18 an hour. I ended up closing three days a week. It just didn’t make sense for me to be open.

What’s more, industry-wide bottlenecks have also forced business owners to wear multiple hats: “from shopping, to garbage collection, to cleaning,” Tejeda said.

It’s a balance between keeping the restaurant afloat and keeping the employees happy.

As the holiday season approaches, business owners are starting to feel the heat of rising inflation, supply chain chaos and labor shortages. The The National Association of Restaurateurs reported last month, 4 out of 5 operators were understaffed, including 81% of full-service operators and 75% of limited-service operators.

Many have had to increase their prices to afford the salary increases and to be transparent with customers about the reason for the changes. However, Tejeda has yet to do so.

“I can’t pass the expenses on to my clients, the backlash is serious,” Tejeda said.

Meanwhile, other challenges began to arise for Bay Area business owners.

At the height of the pandemic, restaurant parklets – the outdoor catering appliances built on sidewalks and parking lots – were essential to the survival of businesses. However, the city will begin to impose new rules on the now permanent structures, which could mean a financial blow to struggling small businesses.

“They have to give us a little more time to recover,” Tejeda said.

“We cannot face more bureaucracy. That’s enough. We’ve had enough of what pre-COVID meant already, so we have a bunch of regulations because of COVID and now not because of parklets, ”she added.

The fate of al fresco dining

People enjoy alfresco dining as the spread of coronavirus disease (COVID-19) continues, in New York, New York, United States on February 4, 2021. REUTERS / Jeenah Moon

People enjoy alfresco dining as the spread of coronavirus disease (COVID-19) continues, in New York, New York, United States on February 4, 2021. REUTERS / Jeenah Moon

In New York City, al fresco dining has sparked heated debate and prompted city officials to codify one of the most transformative changes of decades. It has become a controversial battle that prompted a group of locals to sue the city last month, detailing complaints on outdoor dining.

Despite the ongoing litigation, the town planning committee voted unanimously on Monday for an amendment to the zoning text that will create a clean slate for the city to develop and regulate a permanent program.

“Open Restaurants has saved over 100,000 industry jobs and countless small businesses from financial collapse, and this yes vote is a critically important first step towards building a sustainable future for this very popular program, ”Andrew Rigie, executive director of the NYC Hospitality Alliance, said Yahoo Finance in a statement.

As al fresco dining faces uncertainty, this winter could be a turning point for some restaurants, especially New Yorkers, after the city announced that propane heaters could not be used to provide heat for outdoor dining amid fire safety concerns.

Meanwhile, restaurants have yet to mitigate the effects of a labor shortage and supply chain disruptions that hamper their ability to thrive. Some powerful players have looked to technology to fill in the gaps, especially those facing employee shortages.

Restaurants can be slow to adapt to new technologies because the transition is expensive and complex. But the trend could become imperative for them to thrive after the pandemic.

“There is no doubt that the future of the hospitality industry depends on digitization,” Enrique Ortegon, SVP, SMB, Salesforce, told Yahoo Finance in a statement.

“It has become more imperative than ever for restaurants to adopt technologies that optimize both their customer experience and the productivity of their staff with effective tools and training that prepare them – and their businesses for success.” , he added.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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